How to Survive A Recession | Bizarre Book Cafe
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Wednesday, May 14, 2008

How to Survive A Recession

If I am to trust the harbingers of global news, these are troubled times for common folks all over the world. The prices are rising, supplies are dwindling and pink slips, wage cuts and layoffs across the entire gamut of businesses is just making it worse. Whether someone blames it on the burgeoning middle class in India consuming more and better food or the cropping pattern in the US, these are just political farces staged to shift the common man's focus away from their own leaders' bungling to little understood factors across the oceans. I know economies today do not function in isolation, but I find it hard to digest that my chosen representatives can wash their hands off my plight by simply pointing towards the West...or East, North, South as it suits them.

Anyways, recessions come and recessions go. People live on. It's also amazing how your circumstances make you perceive a phenomenon differently. During the recession of late 90s that started in East Asia, I was just a few years into a career and it never really seemed to affect me. Now, 10 years, a growing child, a home loan and two credit cards later I am really feeling the pinch of an impending recession. I am not trying to sound pessimistic...just stating facts. So what can we do to survive a worldwide recession? First let us do away with the fancy word. Recession (or it's immediate effect) to me translates into my basic expenses being in excess of my earnings. Most economists would faint at this definition, but it makes sense to me!

So what do I do? There are two ways. I can either take a defensive approach or get aggressive. The defensive approach is to save and cut spending. Getting into car pools, walking short distances, using public transport to save money on gas. Making weekly trips to wholesale bargain markets for groceries instead of daily ones to the supermarket next door. Getting rid of short term, high interest credit card loans ASAP. Switching to a debit card instead of a credit card or setting strict limits to credit card spending. Cooking more at home, washing your car yourself, even switching off extra lights will save you bucks that will ultimately count. A good way to start is to list down your biggest expense heads and try to find how to reduce each by 10-15% initially. See if it works for a few weeks and then give it another tone down.

Like all defensive approaches, cutting on expenses has a limited bail-out effect. If you want better results, foster your saving efforts with increasing your earnings. If you run a business, find time to work on additional lines. If you are in a job, find time to take up part-time work or something you can work on from home. If you are a couple, start something together. Entrepreneurship is always the best bet against recession. Hard times often give you that extra reason and inspiration to do something that you always thought you would do. Start a small business of your own. Start on a scale that suits your availability of funds. Put in sincere sweat equity and most importantly get informed and plan your venture well. If you are looking for ideas, here are a few to explore...

book on starting a cleaning business
book on becoming professional organizer
book on starting a daycare business

book on selling digital photos
book on making candy bouquets
book on starting a catering business
book on starting a food company
book on starting bed & breakfast business
book on setting up jewelry booths
These are just some of the ideas that you can work on. One important thing is to choose a venture that tickles a personal interest or passion. Remember this is additional work, so you better work on something that not only earn you money but also allows you to have some fun. Try converting a hobby or existing skill into a business venture. If nothing else, it will keep you a bit happy and sane. Best of luck!

2 comments:

Amanda Cubaum said...

Interesting post. I want to run a business, so I found this helpful with the tips on how to survive a recession. It was oddly motivating. I'd like to buy a business instead of starting one from scratch, but I haven't had much luck looking. Any suggestions? Thanks.

Ethan Vern said...

Amanda-- Have you looked into local small business groups? They might be able to help and direct you. Plus, it's always good to network and get to know your fellow entrepreneurs.

I also suggest BizTrader.com, because it's this online global marketplace where you can invest in, buy, and sell a small business. You can even use it to find a lender or find a broker, should you need either. Good luck!